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The authors gratefully acknowledge research funding from the Government of Japan for the FAO Project, Socio-Economic Analysis and Policy Implications of the Roles of Agriculture in Developing Countries the Roles of Agriculture (GCP/INT/772/JPN ROA). The authors also gratefully acknowledge the comments and suggestions of ROA Central Team, participants in Regional ROA Latin America Workshop May 2003, the DR ROA Inception Workshop, the DR ROA Final Workshop and the FAO International Conference on the Roles of Agriculture, 20-22 October, 2003, and Joe Cooper, Patricia Parera and two anonymous referees. The authors appreciate the collaboration of Abel Hernández, Francisco Herrera, Rolando Guzmán, Carmen Alvarez, Victor Viñas, Julio Moya, Alan Ramírez, Robert Mejía, Ellis Pérez, Ana Sierra, Hamlet Gutierrez, Aran Shetterly, Kelly Robinson, Frank Rainieri, Gallup Dominicana, Aerodom, and the Punta Cana Ecological Foundation.

e J A D E electronic Journal of Agricultural and Development Economics

Agricultural and Development Economics Division (ESA) FAO

available online at www.fao.org/es/esa/eJADE

Vol. 1, No. 1, 2004, pp. 87-116

Agriculture, Environmental Services and Agro-Tourism in the Dominican Republic

Alejandro Herrera Catalino and Magdalena Lizardo

Technological Institute of Santo Domingo (INTEC) and Researcher of the Grupo de Consultoría Pareto

[email protected]

Abstract This paper analyzes the links between agriculture and tourism. A contingent valuation study assesses tourist’s willingness to pay (WTP) for agro-tourism and agriculture’s positive environmental services and related positive externalities. The paper analyzes factors influencing tourist preferences in the Dominican Republic (DR) -- tourist income, the local tourist destination, sex, and nationality stand out among these factors. Estimates are given for different WTP scenarios according to farming systems. The study argues that a well developed agro-tourism industry would result in a market mechanism generating additional income of US $251 to US $364 million annually. Agro-tourist activities would have the added benefit of promoting sustainable agricultural practices.

Keywords: agriculture, Dominican Republic, contingent valuation, environment, tourism

1. Introduction This study analyses the relationship between agriculture and tourism in the Dominican Republic (DR) from two perspectives. The first is agriculture’s relatively small role as a supplier of food to tourists. The second is how agriculture can accommodate tourist preferences for agro-tourism. Agro-tourism is

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defined here as a set of rural activities, including participating in farming activities; exploring local culture; enjoying the landscape and agro-biodiversity; observing organic and conventional agricultural practices; and sampling tropical fruits and vegetables. This study argues that in the DR, a more developed agro-tourism sector would both improve conventional tourist sector competitiveness and improve sustainable agricultural practices by maintaining and increasing positive externalities and non-market services provided by agriculture. Agro-tourism has the potential to play an important role in a country whose economy is largely dependent on income derived from agricultural exports and recreational tourism. Yet, in the DR, the positive externalities and environmental services generated by agriculture are not internalized by market instruments nor by economic policy mechanisms that help it to respond to tourist preferences for rural settings. The result is a lost opportunity to provide more jobs, more income, a more viable rural society and a more sustainable and diverse environment. This study aims to evaluate, in a holistic sense, the roles of agriculture and their contribution to local, regional, national, and global sustainable development, as well as their potential to improve country’s ability to compete with other tourist destinations. In particular, the objectives of this study are to: identify the preference levels and willingness to pay (WTP) of tourists for agro-tourism in the Dominican Republic; define a typology of agro-tourists; and estimate the potential economic contribution of agro-tourism and the willingness of tourists to support environmental services provided by agriculture. The study presents the results from a survey on national and international tourist preferences and WTP for visits to rural destinations.1 This study assesses agro-tourism’s potential in two farming systems which represent the predominant agricultural systems in the DR: 1) organic coffee production in Río Limpio, in the province of Elias Piña; and 2) conventional agriculture in the San Juan de la Maguana Valley, with intensive production of rice, beans, and other subsistence crops under irrigation. The paper is organized as follows. First, the history of the relationship between tourism and agriculture in the DR is presented, followed by a profile of the then the tourist market in the DR. Next, the methodology is discussed. Results are analyzed in subsequent sections, including the construction of a typology of agro-tourists, the analysis of the determinant factors for preferring agro-tourist activities and the estimation of the potential economic contribution of agro-tourism. Finally, the conclusions are presented. 2. History of the Relationship between Tourism and Agriculture in the Dominican Republic Up until the end of the 1980s, when the tourist industry first began to develop, the DR was internationally known as a predominantly agricultural country, highly dependent on the income generated from the export of coffee, cocoa, tobacco, and sugar cane (Shaw 2002).2 A characteristic of this period was the weak link between the agricultural and tourist sectors.. In the 1980s, changes in development policy lead to linking of these sectors, particularly with respect to specific farm products3. By 1994, hotel consumption represented the following proportions: fruits and vegetables 34%, greens 3.8%, eggs 25.2%, dairy 8.7%, meat 6.8%, fish and shellfish 4.4%, and

1 Guidelines from a selected group of studies that applied the Contingent Valuation Method (CVM) in developing countries helped shape our study. See Krutilla (1967); McConnell (2002); Hanemann (1994); Randall et al. (1994); Diamond (1994); Azquetaq (1994); Dixon et. al. (1994); Herrera (1995); Cooper (2000); Alberini et al.. (2000) and ROA methodological papers by FAO. http://www.fao.org/es/esa/roa/forum/user/. 2 See Shaw (2002). Pages 198-200, for a detailed overview of the six stages of tourists development. 3 The Central Bank’s incentive policies for the tourist sector were promoted in by INFRATUR until the 1979 legat reform and later by DEFINPRO. According to Veloz et al. (1978), INFRATUR registered a greater rate of financing to the tourist sector, reaching US $41.4 million, four time greater than the amount financed in 1977 (See Lizardo and Guzmán, (2002)).


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processed meats 0.9%. The hotel sector paid $25.0 million dollars for these products, equivalent to 4.6% of agricultural GDP.4 The tourist sector expanded during the 1990s with the introduction of new economic reforms, including commercial, tax and exchange rate reforms. These policy reforms also fostered the emergence of new agro-processing industries and a rapid growth of some agricultural products, eg, fruits, vegetables and poultry meat. The more traditional agro-export sector shrank during the 1990s. Therefore, the economic reforms and the country’s transition to an economy based increasingly on services mark the appearance of integration possibilities between tourism and agriculture, sectors that would now trade not only in goods for direct use, but also in services for non-direct use. Agro-tourism provides an opportunity to increase agriculture’s participation in the tourist sector through the provision of goods and services in the form of the cultural and environmental amenities associated with agriculture. 3. The Dominican Republic tourist market During the last 10 years, tourism in the Dominican Republic contributed an annual income exceeding US $3,000 million, attracting more than 3.0 million foreign tourists, generating more than 150,000 jobs, contributing more than US $1,000.0 million to the treasury from taxes, and sustaining a contribution of more than 6.0% of the GDP. The hotel sector is the most important component of tourism. The DR has more than 52,000 hotel rooms, a quantity that exceeds the total number of rooms in all the Caribbean Islands together. Ninety% of the rooms are located along the coasts; 50% are concentrated in the eastern part of the island (Punta Cana, Bávaro, La Romana, Bayahibe, and Juan Dolio); and 30% are in Puerto Plata in the northern part of the DR.5 Most conventional tourism in the DR is located along the coast in a tourism development zone with service infrastructure (airports, highways, aqueducts, electric generators, waste management services, hospitals, schools, and related services). 6 While beach recreational tourism represents 90% of the tourist activity, other attractions such as infrastructure for conventions and event-based tourism, health-related tourism, sports tourism (marines, ports, golf courses, and sport facilities), cultural tourism, and ship cruise tourism are being created. Paradoxically, ecotourism and rural tourism, which require less investment, are not being developed, in spite of the Caribbean’s reputation as a “hotspot” due to its particular location, which allows the observation of migratory and endemic species, at the same time offering exotic sites for the enjoyment of adventure tourism, mountaineering, and cave exploration, among other activities.7 Two possible reasons help explain why rural tourism has not been developed in the DR. The first explanation is that the tourist-resort model found along the coastal zones excludes alternative sites. According to urban and regional planners, the territorial arrangement of tourist zones has been conceived in a way that separates them from other zones of economic activity. Agricultural zones are among those separated from the tourist areas.

4 See Castellanos (1996): It is important to stand out that for the year 1994 the quantity of room available was 28,967, which represents the half of today. It not includes values of craftsmanship goods made with agriculture raw material 5 See Tourist Bulletin of National Association of Hotels and Restaurant of the Dominican Republic. ASONAHORES. 2002. Pag. 40. 6 The participation of the different tourist offering in the DR are the followings: All inclusive plan (TI=57.35%); American Plan (AP=17.65%); European Plan (EP=16.18%); Medium American Plan (MAP=5.88); Full American Plan (FAP=2.94%). (ASONAHORES, 2002). Other important aspect to remark is that tourism of recreation and pleasure represents 96% of tourist preferences; hotels are the most preferred lodge for the 94% of tourists; the gender distribution is more or less equal (51.2% male; 48.8% female); the younger segment of the population (21-49 years) represents 65% of tourists; the average of daily expenses is around of US $100; and the days stay in the country is around of 10. 7 According to Conservation International, the RD is defined as one of the 10 “hotspots”, or priority areas for the conservation of the biodiversity in the world. See Kheel (2003). Cornell University. Thesis. Also see the web sites, www.sectur.com.do/ www.dominicana.com.do


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The territorial arrangement shows the principal attraction to be the sea and the coast. The make-up of the tourist industry in the DR today exacerbates the difference in standards of luxury resorts and the communities that surround them which often lack even basic services. Investment in public infrastructure is focused on urban centres and little is invested in the rural and agricultural zones. A second explanation relates to the oligopolistic structure of international tour operators. More than 80% of the tourists that arrive in the DR come into the country with one of the five large tour operators. These operators offer packages with few or no activities beyond the resort complexes that make up their chains. Neither the tourist sector nor the local non-tourist sector have made initiatives to develop complimentary services or to better integrate into the existing network. As mentioned, the limited infrastructural development and institutional mechanisms within local communities are not conducive to the types of services required to respond in a systematic way to niche demands like agro-tourism, eco-tourism, and cultural tourism. This is in spite of a System of Protected Areas composed of some 70 conservation areas totalling 12,691.78 km2 (8,031.28 km2 of which are inland, and 4,600.5 km2 are coastal), which make up 16% of the total national territory. The Protected Area registries indicate that only half a million visitors, 92% of whom are foreigners, visit the protected areas. This represents, in economic terms, a small complimentary income from a modest tariff, the only way in which conventional tourism gives economic support to eco-tourism. This is a marked contrast to Costa Rica, where rural tourism, particularly eco-tourism, generates more income than resort tourism. A final observation is that the classification criteria and measurements of tourist demands in the DR are limited exclusively to conventional tourism. The classification of the tourist demand does not include in any explicit way motivations associated with agriculture and agro-tourism. Therefore, measures to evaluate satisfaction levels and preferences among tourists are limited to factors such as natural beauty, quality of the beach and climate, hospitality, prices, golf courses, casinos, tranquillity, historical richness, and past visits. New surveys are required to analyze the preference levels for an integrated package: recreational and pleasure tourism, agro-tourism, eco-tourism, cultural tourism, and the WTP for both the actual tourist market and the potential tourist market. Identifying new opportunities for tourism could contribute to the promotion of supplementary agricultural roles associated with the conservation of natural resources.8 4. Methodology This study evaluates whether agro-tourism has the potential to complement conventional tourism in the DR. The first step is to understand the characteristics of the tourists interested in agro-tourism in the DR. Second, what is the tourist's WTP for agro-tourism in the DR. Third, what are the factors that determine a tourist's WTP to enjoy agro-tourism. Fourth, what is the tourists’ WTP for the existence of positive externalities associated with agriculture. And finally, what is the potential income that the development of agro-tourism could represent to the national economy. In this paper, agro-tourism is defined as attractions and activities in and around agricultural communities that tourists participate in. Examples include visits to farms to sample tropical fruits and vegetables, participating in farming activities, exploring the local agricultural culture, enjoying the landscape and biodiversity provided by agricultural areas, and observing the practices of organic farms, appreciating the benefits to conservation and natural resources. The study is based on a sample survey of non-resident visitors interviewed in the country’s three major airports during the high tourist season of 2003. The size of the sample is 712 and the margin of error is 3.75%. Some 81% of those surveyed were foreigners and 19% were non-resident Dominicans.

8 Studies on the relationship between agriculture and tourism in the DR were taken from Castellanos (1996), assessing the inter-sector demand for goods and services, labor employment, and the negative environmental impact that each sector produces.


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The survey questionnaire includes 17 questions, divided into six sections: i) preferences for different tourist activities; ii) preferences for activities linked to agro-tourism; iii) importance assigned by tourists to the factors that diminish the practice of agro-tourism; iv) tourists’ WTP to participate in agro-tourism in two distinct farming systems; v) WTP for the existence of positive externalities from agriculture; and, vi) tourist socio-demographic characteristics and geographic location where the survey was applied. The first three sections of the questionnaire were structured with 0-6 range responses, where 0 means little preference or importance; 3 means indifference; and 6 means strongly preferred or very important. Data analysis was organized into three groups. 0-2 represents the range of irrelevant answers; 3 indicates indifference, and 4-6 the range of relevant responses. The study evaluates the preferences and WTP to enjoy agro-tourism in rural zones where prevailing agriculture systems demonstrated distinct characteristics in terms of agricultural practices, history and cultural manifestations in the area. One of the selected communities is Río Limpio, located in the province of Elías Piña, on the Haitian border, and adjacent to the Nalga de Maco National Park. This community is characterized by the production of coffee and organic vegetables, and a strong local commitment to protect the natural resources. The second locality is the San Juan de la Maguana valley, characterized by intensive production of rice, beans, and other subsistence crops. These communities preserve vestiges of Taíno culture and have strong magic and religious beliefs. Both localities are near the national parks Sierra de Bahoruco and Enriquillo. Interview aids included: a) a map to show the interviewee the geographic location of the two places selected for agro-tourism, as well as six other places that are relatively well known by their ecological, cultural, recreational and adventure attractions in the DR; and b) a brief description informing the interviewee of the amenities they would find in each of the tourist sites and surrounding areas. Among the considerations and assumptions of the CVM applied here include the following: i- When assigning values to non-use goods and services provided by agriculture, the preference levels assigned to their existence value may tend to be lower than the preference levels resulting from the survey, due to numerous biases that can be introduced during the interview process.; ii- In determining and characterizing the non-use direct vales of agriculture’s positive externalities it is possible several find limitations should be taken into account: One concern is whether the non-use values refer to a specific place or are generalized. For our purposes they are generalized, since the farming systems and positive externalities found were representative of agriculture in all regions of the DR; Another concern is the individual’s motivation for showing a WTP for positive environmental externalities among several options (to address this concern a range of econometric models were estimated to assess this motivation); A third concern is the identification of the segments of the population that would benefit from positive environmental externalities. To address this matter, we use primary information to define a typology of agro-tourists, based on their WTP for agro-tourism and positive externalities of agriculture as well as the relative importance they assign to disincentive factors related to agro-tourism (appropriate infrastructure, transportation costs, personal security and surrounding attractions). This typology identifies tourists that would enjoy agro-tourism amenities and would be willing to support sustainable agriculture or contribute to the solution of environmental problems by different means (ie, consume products from sustainable farming systems in developing countries or paying higher taxes for supporting farming systems that reduce CO2 emissions). We recognize that local rural populations also benefits from the development of agro-tourism through income generation and the amenities and positives externalities of agriculture created in its own environment. iii-. A budgetary restriction to tourist’s WTP for amenities related to agricultural systems and for the existence of positive externalities should be applied. This study adopted the FAO (2000)


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recommendation that the value of multiple WTP be taken into account should not exceed 5% of the tourist’s annual income. In determining agro-tourism’s potential income, this study uses the analysis of conglomerates, or "clusters", to construct a typology of agro-tourists according to the following dimensional analyses: i) preference levels for participating in agro-tourism in the DR, on a scale of 0-6, ii) disincentive factors for engaging in agro-tourism in the DR, iii) and, WTP for agro-tourism in organic agricultural systems of Río Limpio, the conventional agricultural system of San Juan de Maguana, or in both sites. Based on the segmentation of the potential market for agro-tourism in the DR, the study evaluates six distinct scenarios to determine the income that could be generated. These scenarios are constructed on the basis of two assumptions: i) discerning distinct groups of agro-tourists based on their WTP for agro-tourism and for supporting sustainable agricultural practices, and ii) no discrimination among agro-tourists. In each case, the potential income is evaluated by assuming distinct values for the WTP for agro-tourism and support for sustainable practices. These values are the mean, median, and mode of the respective WTP within each scenario. 5. Agro-tourism and tourist preferences The tourists that visit the DR are primarily people who enjoy beaches. Around 90% of those interviewed indicated that they had relevant preference levels for recreational tourism: sun, beach and sand. Other activities with high preference levels were cultural tourism, adventure tourism, and sports tourism. Eco-tourism and agro-tourism are the activities with the lowest percentages of relevant preference and highest percentages of indifference among tourists. The tourist activities most offered as compliments to beach tourism are adventure tourism and cultural tourism. About 30% of the tourists in the survey were offered eco-tourism as an activity to be enjoyed in the Dominican Republic and 19% were offered agro-tourism. Of the total surveyed, 14.9% had participated in agro-tourism in the DR at some point, of which 43.6% are non-resident Dominican tourists and 56.4% are foreign tourists. Only 8.4% of the foreign tourists that visited the country choose to participate in some type of agro-tourism activity. The majority of tourists with preferences for agro-tourism preferred to enjoy the rural landscape and explore local agricultural cultures. A minority were interested in how organic fruits and vegetables are produced. The percentage of tourists who wanted to get involved in farming activities was very low. This distribution of preferences among agro-tourist activities is the same as the distribution among tourists who had demonstrated having relevant preferences for activities different from agro-tourism. In the case of foreign tourists, the agricultural practices considered of greatest importance are those that best conserve natural landscapes and forest resources,, followed to a lesser degree by the conservation of habitat, biodiversity, and agricultural traditions and cultures. Foreign tourists showing preferences for agro-tourism identified several concerns: personal security, the lack of facilities and infrastructure and the absence of attractions around the agro-tourist destination. For a smaller percentage, transportation costs and the distance between their place of lodging and the agro-tourist sites represented the primary disincentives. Finally, tourist preferences regardless of relevance levels indicate that the Santo Domingo museums, Samaná Bay, Saona Island, and Enriquillo Lake are the most visited sites to complement their trip to DR. Samaná Bay and Saona Island are the most preferred sites. The places which tourists would be most likely to reject are, in order of importance, Enriquillo Lake, the Duarte Peak, and the Haitises National Park.


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6. Who would prefer agro-tourism in the Dominican Republic We have estimated an ordered logit model to determine what kind of tourist would enjoy an agro-tourist experience in the DR. In the model, the ranking of preferences for agro-tourism is explained as a function of the tourist's socio-demographic and economic characteristics, as well as his or her preference for certain recreational activities. The survey questionnaire asked a sample of tourists to specify preferences for agro-tourist recreational activities, on an scale from 0 to 6, where 0 means not preferred and 6 highly preferred. Tourists were also asked about their preference level for other recreational activities that might substitute or complement agro-tourism. Those tourist activities are: i) adventure tourism, ii) beach recreation, iii) eco-tourism, iii) cultural tourism, and iv) sports tourism. Since the attractiveness of agro-tourism can be associated with a variety of activities linked to agriculture and the rural lifestyle, tourists were asked to specify their preference levels for enjoying certain amenities associated with agro-tourism. Those amenities are: i) participation in crop planting activities, ii) exploration of local rural lifestyles, iii) enjoyment of rural landscapes; and iv) acquiring knowledge about organic production. The socio-demographic and economic characteristics considered are: i) dummy variables for gender, education, USA nationality, Canadian nationality, European nationality, Dominican nationality, ii) continuous variables age, age squared, log of annual income, and number of children travelling iii) dummy variables airport of arrival Puerto Plata and Punta Cana. There are no a priori hypotheses assigned to the coefficients associated with these variables, except in the cases of Dominican nationality and number of children travelling, the coefficients of which were expected to be negative. The variables Punta Cana and Puerto Plata are used in order to capture any fixed effect associated with tourists that visit different tourist poles in the DR. The Puerto Plata pole is located on the north side of the country and the Punta Cana pole is located on the southeast side. With respect to alternative tourist activities to be developed in the DR, it is expected that preferences for eco-tourism and agro-tourism will complement each other (See the Data Appendix, Note 1). The results are presented in Table 1. The demographic and economic characteristics with significant impact on the preference levels for agro-tourism are higher education and entry into the country by Puerto Plata. In the first case, the impact is negative, while in the second case positive. The variables women, log (income), Dominican, USA nationality, Canadian, and European have coefficients with positive signs, but they are not significantly different from zero. The number of children travelling, although with the expected negative sign, is also not significantly different from zero. Eco-tourism, Cultural tourism and Sport-tourism are all positively and significantly associated with agro-tourism. Those respondents who highly prefer eco-tourism, cultural tourism or sport-tourism are also highly prefer agro-tourism. Beach tourism, on the other hand, is negatively related to agro-tourism. The types of agro-tourism amenities that tourists prefer are exploration of local rural lifestyle and learning about organic production. Both activities are associated with the culture and heritage of rural people. The DR has a relatively well-known reputation as an organic producer of goods such as coffee, bananas and cocoa. The Dominican tourist sector can take advantage of this reputation to increase product differentiation and to compete with other tourist destinations. An interest in organic production can also be exploited by local hotels when selecting the food they offer to tourists. 7. Willingness to Pay for Agro-tourism and its Determinants Tourists were asked to value two sites with high agro-tourism development potential yet markedly different farming systems. The expressed their WTP for: i) an agro-tourist experience in Río Limpio, ii) an agro-tourist experience in San Juan de la Maguana, and iii) an agro-tourist experience in both sites. The unconditioned average of tourists’ WTP for agro-tourism in the communities of Río Limpio


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and San Juan de la Maguana is US $131 and US $128 respectively. The average grows to US $205 when the tourist is offered the option of visiting both places as part of the same package.

Table 1 Determinants of agro-tourism preferences. Ordered logistic model estimation results

Regressors Coefficient Robust Std. Err. z P>|z|

Socio-demographics and economic variables

Women 0.0899 0.1622 0.55 0.579 Age -0.0101 0.0485 -0.21 0.836 Age squared 0.0002 0.0006 0.29 0.774 Higher education -0.4457 0.1822 -2.45 0.014 Log(Income) 0.1142 0.1015 1.13 0.261 Dominican nationality 0.0664 0.3190 0.21 0.835 USA nationality 0.1561 0.2735 0.57 0.568 Canadian nationality 0.1811 0.3227 0.56 0.575 European nationality 0.0949 0.3117 0.30 0.761 Number of children travelling -0.2599 0.1033 -2.52 0.012 Puerto Plata 0.5372 0.2637 2.04 0.042 Punta Cana -0.1363 0.2015 -0.68 0.499 Level of preference for agro-tourism competing activities Tourism of adventure 0.0263 0.0684 0.38 0.701 Beach tourism -0.1449 0.0702 -2.07 0.039 Eco-tourism 0.5065 0.0914 5.54 0.000 Cultural tourism 0.3642 0.0965 3.77 0.000 Sport tourism 0.2154 0.0646 3.33 0.001 Level of preference for agro-tourism amenities Participating in Planting activities 0.1223 0.0773 1.58 0.114 Exploring Local Rural Lifestyle 0.2863 0.0967 2.96 0.003 Enjoying rural landscape -0.0700 0.0826 -0.85 0.397 Knowing about organic production 0.2613 0.0769 3.40 0.001 Ancillary Parameters Estimation µ1 3.2544 1.2966 µ2 4.3935 1.2932 µ3 5.2400 1.2973 µ4 6.7070 1.3099 µ5 8.2010 1.3266 µ6 9.8268 1.3434 Number of observations 577 Wald chi2(12) 392.47

Prob > chi2 0.0000 Pseudo R2 0.2200

Levels of importance for conservation practice range from 0 (highly important) to 6 (highly important). Bold p>|z| indicates the coefficient is significantly different from 0 at 5% or 10%. Source: Elaborated using data from Survey of Agro-tourism in the Dominican Republic 2003. ROA-FAO/INTEC Project. One aim of this study is to analyze to what extent tourists’ valuation of agro-tourism in different farming system differs, as well as to understand the driving factors that help explain those differences. For analyzing the determinants of tourist’s WTP for agro-tourism in different farming system, we


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estimate a SUR model. In this model, the tourist’s WTP for each one of the three options considered are determined by tourist’s socio-demographic and economic characteristics, and his/her preference level for agro-tourism amenities and for other competing tourist activities. The specification of a SUR model rests on the assumption that the errors terms in each regression equation are correlated. Estimated results are presented in Table 2. For each of the three alternatives, tourist WTP for agro-tourism increases relative to a tourist's income. Also, women and people younger than 40 years have a greater WTP for agro-tourism. The impact of the nationality dummy variable does not appear to differ significantly from zero in the specific case of WTP for agro-tourism in Río Limpio, San Juan de la Maguana and for both sites. The only exception was in the case of Río Limpio and San Juan de la Maguana, where Canadian nationality had a negative impact on WTP. Tourists arriving at Puerto Plata were less willing to pay for agro-tourism in the DR. Travelling with children has a negative impact on WTP in all three alternatives, although they appear to be not significantly different from zero. Table 2 Determinants of willingness to pay for agro-tourism. SUR model estimation results Regressors Coefficient Std. Err. z P>|z| Dependent Variable; Log( WTP for Rio Limpio)


Women 0.2189 0.0741 2.95 0.003 Age <40 0.169 0.0755 2.24 0.025 Higher education 0.0195 0.0856 0.23 0.819 Log(Income) 0.2609 0.0561 4.64 0.000 Dominican nationality -0.2025 0.15411 -1.31 0.189 USA nationality -0.1599 0.1412 -1.13 0.257 Canadian nationality -0.2528 0.1519 -1.66 0.096 European nationality -0.0854 0.1635 -0.52 0.601 Number of children travelling -0.0827 0.0519 -1.59 0.111 Punta Cana -0.6947 0.1114 -6.24 0.000 Puerto Plata 0.0975 0.1016 0.96 0.338

Level of preference for agro-tourism competing activities Tourism of adventure 0.0698 0.0273 2.55 0.011 Beach tourism 0.0362 0.0341 1.06 0.287 Eco-tourism -0.0276 0.0282 -0.98 0.329 Cultural tourism -0.003 0.0334 -0.01 0.991 Sport tourism -0.036 0.0238 -1.51 0.131

Level of preference for agro-tourism amenities Participating in Planting activities 0.0153 0.0275 0.56 0.577 Exploring Local Rural Lifestyle -0.0123 0.0336 -0.37 0.713 Enjoying rural landscape 0.0478 0.0369 1.3 0.195 Knowing about organic production 0.0626 0.0281 2.22 0.026 Constant 1.1786 0.6168 1.91 0.056 Cont…


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.

Table 2 Determinants of willingness to pay for agro-tourism. SUR model estimation results

Regressors Coefficient Std. Err. z P>|z| Dependent Variable; Log(WTP for San Juan de la Maguana)


Women 0.2099 0.0793 2.64 0.008 Age<40 0.1895 0.0808 2.34 0.019 Higher education -0.0019 0.0916 -0.02 0.983 Log(Income) 0.3099 0.0601 5.15 0.000 Dominican nationality -0.2343 0.165 -1.42 0.156 USA nationality -0.2004 0.1512 -1.33 0.185 Canadian nationality -0.3551 0.1626 -2.18 0.029 European nationality -0.1226 0.1751 -0.7 0.484 Number of children travelling -0.0306 0.0556 -0.55 0.582 Punta Cana -0.4617 0.1193 -3.87 0.000 Puerto Plata 0.0959 0.1088 0.88 0.378

Level of preference for agro-tourism competing activities

Tourism of adventure 0.0692 0.2933 2.36 0.018 Beach tourism 0.02 0.0364 0.55 0.583 Eco-tourism -0.0282 0.0302 -0.93 0.35 Cultural tourism -0.0058 0.0357 -0.16 0.871 Sport tourism -0.0079 0.0255 -0.31 0.755

Level of preference for agro-tourism amenities

Participating in Planting activities 0.0191 0.0294 0.65 0.515 Exploring Local Rural Lifestyle 0.0007 0.036 0.02 0.984 Enjoying rural landscape 0.0625 0.0395 1.58 0.114 Knowing about organic production 0.0383 0.0301 1.27 0.204 Constant 0.5731 0.06605 0.87 0.386 Cont…


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Table 2 Determinants of willingness to pay for agro-tourism. SUR model estimation

results

Regressors Coefficient Std. Err. z P>|z| Dependent Variable; Log (Wtp for Both Sites)


Women 0.2131 0.0903 2.36 0.018 Age<40 0.2178 0.0921 2.37 0.018 Higher education -0.0051 0.1043 -0.05 0.961 Log(Income) 0.3063 0.0684 4.47 0.000 Dominican nationality -0.0779 0.1878 -0.42 0.678 USA nationality -0.0293 0.1721 -0.17 0.865 Canadian nationality -0.1859 0.1851 -1 0.315 European nationality -0.0582 0.1993 -0.29 0.770 Children travelling -0.0096 0.0633 -0.15 0.879 Punta Cana -0.7346 0.1357 -5.41 0.000 Puerto Plata 0.0616 0.1239 0.5 0.619

Level of preference for agro-tourism competing activities

Tourism of adventure 0.0616 0.0333 1.97 0.048 Beach tourism 0.0402 0.0415 0.97 0.332 Eco-tourism -0.0314 0.0344 -0.91 0.361 Cultural tourism -0.0178 0.0407 -0.44 0.661 Sport tourism -0.0247 0.0291 -0.85 0.394

Level of preference for agro-tourism amenities

Participating in Planting activities 0.0227 0.0335 0.68 0.498 Exploring Local Rural Lifestyle 0.0084 0.041 0.21 0.836 Enjoying rural landscape 0.0647 0.0449 1.44 0.150 Knowing about organic production 0.0455 0.0343 1.33 0.185 Constant 1.0093 0.7518 1.34 0.179 Equation*** RMSE R-sq Chi2 P Log(WTP for Rio Limpio) 0.7634 0.2717 176.84 0.0000 Log(WTP for San Juan de la Maguana) 0.8174 0.1974 116.57 0.0000

Levels of preference for agro-tourism range from 0 (not preferred) to 6 (highly preferred). Bold p>|z| indicates the coefficient is significantly different from 0 at 5% or 10%. Number of observations= 494. Source: Elaborated using data from Survey of Agro-tourism in the Dominican Republic 2003. ROA-FAO/INTEC Project. Adventure tourists have a higher WTP for agro-tourism in each of the three alternatives considered. Tourists that greatly prefer to learn about organic production systems have a higher WTP for visiting Río Limpio. None of the others agro-tourism amenities appear to have an impact significantly different from zero for the alternatives presented. The hypothesis that the error terms for each of the three equations are not correlated is rejected. Several cross-equation hypotheses are tested in order to see if the impact of a tourist’s socioeconomic variables and preference for agro-tourism amenities and other recreational alternatives impact


98

differently the WTP for agro-tourism in the two distinct farming systems. The hypothesis that the impact on the average WTP of the variable women is similar for each of the three agro-tourism alternatives is not rejected. A similar situation occurs with the variables log income and people younger than 40 years. The hypothesis that the coefficients corresponding to competing agro-tourism activities are jointly equal to zero on each one of the WTP equations is not rejected by a conventional level of significance. Thus, the levels of tourist preference for recreational activities that might compete with agro-tourism appear to have no impact on the average WTP for the three agro-tourist experiences considered. Finally, a set of hypotheses is tested in relation to tourist preferences for agro-tourism amenities. The first test is whether the coefficients corresponding to tourist preferences for agro-tourism amenities are simultaneously equal to zero in the three equations. The hypothesis is rejected at a significance level of 10%. However, the hypothesis that the coefficient of the preference levels for each agro-tourism amenity is the same can not be rejected at more restrictive significance levels. Thus, once the impact of preference for agro-tourism amenities is evaluated jointly, there is no particular amenity that has a differentiated impact on the average WTP. 8. Willingness to pay for positive agriculture externalities The study also evaluates tourists’ WTP for the existence of positive externalities associated with agriculture or the existence of practices that reduce agricultural negative externalities (See the Data Appendix, Note 2). The agricultural practices considered are those associated with soil conservation, efficient water use, biodiversity, habitat conservation, forest conservation, natural landscape conservation, conservation of rural traditions and culture, and development of organic agriculture. While some tourists would think that the adoption of conservation practices would only have a local or regional impact (and consequently, no direct impact over their way of life), others perceive that the adoption of these practices would have global benefits that would impact them indirectly. Hence, tourist WTP reflect, in part, the tourist’s perception of the scope and nature of the externalities generated by the adoption of conservation practices. To analyze the determinants of tourists’ WTP for positive externalities and related agricultural environmental services or for practices that reduce negative externalities, we estimated a WTP regression with corrections for sample selectivity. The estimated results are presented in Tables 3.1-3.7. In all regression equations that evaluate WTP for the adoption of each one of the conservation practices considered, intercepts are positive but they are significantly different from zero in the cases of forest conservation, habitat and biodiversity conservation and water conservation practices.


99

Table 3.1 Determinants of willingness to pay for adoption of soil conservation

practices - Heckman correction model estimation results

Regressors Coefficient Robust Std. Error Z P>|z|

Log(WTP Soil Conservation Practices) Women 0.0241 0.1141 0.21 0.833 Edad1 0.541 0.1928 2.8 0.005 Log(income) 0.2468 0.0657 3.76 0.000 Higher Education 0.0936 0.1255 0.75 0.456 Dominican nationality 0.0083 0.2226 0.04 0.97 USA nationality -0.3658 0.2061 -1.77 0.076 European nationality 0.1818 0.2521 0.72 0.471 Canadian nationality -0.5446 0.2348 -2.32 0.02 Puerto Plata 0.0788 0.1702 0.46 0.643 Punta Cana 0.3425 0.1449 2.36 0.018 Constant 0.4201 0.7456 0.56 0.573 Number of observations 623 Censored observations 328 Non-censored observations 295

Wald test chi2(10) 36.1600 Prob>chi2= 0.0001

Selection Equation: Disposition to pay for adoption of soil conservation practice Importance of: Soil Conservation Practices 0.0915 0.0345 2.65 0.008 Efficient Water Use 0.0584 0.0479 1.22 0.223 Habitat and Biodiversity Conservation -0.009 0.0616 -0.15 0.883 Forest Conservation -0.0202 0.0837 -0.24 0.809 Natural Landscape Conservation 0.0241 0.0803 0.3 0.764 Traditions and Rural Lifestyle Conservation 0.0917 0.0495 1.85 0.064 Organic Production 0.0471 0.0376 1.25 0.211 Constant -1.3377 0.3116 -4.29 0.000 /athrho -0.8136 0.2617 -3.11 0.002 /lnsigma 0.0999 0.0938 1.06 0.287 Rho -0.6715 0.1436 Sigma 1.1051 0.1037 Lambda -0.7421 0.2224 Wald test of independence equations (rho=0): chi2(1)= 9.66 Prob>chi2= 0.0019

Levels of importance for conservation practice range from 0 (highly important) to 6 (highly important). Bold p>|z| indicates the coefficient is significantly different from 0 at 5% or 10%. Source: Elaborated using data from Survey of Agro-tourism in the Dominican Republic 2003. ROA-FAO/INTEC Project.


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Table 3.2 Determinants of willingness to pay for adoption of soil conservation



Log(WTP for Adoption of Efficient Water Use Practices) Women 0.0467 0.1012 0.46 0.644 Age < 25 0.5068 0.1616 3.14 0.002 Log(income) 0.1861 0.0624 2.98 0.003 Higher Education 0.148 0.107 1.38 0.167 Dominican nationality -0.0472 0.1726 -0.27 0.784 USA nationality -0.3773 0.165 -2.29 0.022 Europe nationality 0.1871 0.2242 0.83 0.404 Canada nationality -0.4004 0.1939 -2.06 0.039 Puerto Plata -0.1013 0.1711 -0.59 0.554 Punta Cana 0.2042 0.1292 1.58 0.114 Constant 1.095 0.6562 1.67 0.095 Number of observations 610 Censored observations 248 Non-censored observations 362 Wald test Chi2(10) 32.2900 Prob> chi2= 0.0004

Selection Equation: Disposition to pay for adoption of efficient water use practice Importance of: Soil Conservation Practices 0.0519 0.0342 1.52 0.129 Efficient Water Use 0.1436 0.0446 3.21 0.001 Habitat and Biodiversity Conservation -0.1348 0.0694 -1.94 0.052 Forest Conservation 0.0048 0.0766 0.06 0.949 Natural Landscape Conservation 0.0535 0.0685 0.78 0.435 Traditions and Rural Lifestyle Conservation 0.0971 0.0531 1.83 0.068 Organic Production 0.0154 0.0404 0.38 0.702 Constant -0.8194 0.2316 -3.54 0.000 /athrho -0.9747 0.1878 -5.19 0.000 /lnsigma 0.1226 0.0678 1.81 0.071 rho -0.7507 0.0819 sigma 1.1304 0.0767 lambda -0.8487 0.1423 Wald test of independence equations (rho=0): Chi2(1)= 26.9400 Prob > chi2= 0.0000



101

Table 3.3 Determinants of Willingness to Pay for Habitat and Biodiversity Conservation Practices - Heckman correction model estimation results


Log(WTP Adoption Habitat and Biodiversity Conservation Practices) Women 0.1109 0.1052 1.05 0.292 Age< 25 0.4985 0.1879 2.65 0.008 Log(income) 0.1477 0.0650 2.27 0.023 Higher Education 0.2089 0.1164 1.79 0.073 Dominican nationality -0.3319 0.2251 -1.47 0.14 USA nationality -0.5220 0.2202 -2.37 0.018 European nationality -0.0415 0.2595 -0.16 0.873 Canadian nationality -0.6369 0.2319 -2.75 0.006 Puerto Plata -0.0563 0.1653 -0.34 0.733 Punta Cana 0.1337 0.1418 0.94 0.346 Constant 1.643 0.6806 2.41 0.016 Number of observations 620 Censored observations 253 Non-censored observations 367 Wald test chi2(10) 27.3100 Prob>chi2= 0.0023 Selection Equation: Disposition to pay for adoption of habitat and biodiversity conservation practices Importance of: Soil Conservation Practices 0.0921 0.0359 2.56 0.01 Efficient Water Use -0.0063 0.0475 -0.13 0.894 Habitat and Biodiversity Conservation 0.0497 0.0581 0.86 0.392 Forest Conservation 0.0071 0.0752 0.09 0.925 Natural Landscape Conservation 0.0494 0.0694 0.71 0.476 Traditions and Rural Lifestyle Conservation 0.0197 0.0485 0.41 0.684 Organic Production -0.0054 0.0386 -0.14 0.887 Constant -0.7145 0.2359 -3.03 0.002 /athrho -0.7278 0.2474 -2.94 0.003 /lnsigma 0.1081 0.0788 1.37 0.17 rho -0.6217 0.1517 sigma 1.1141 0.0877 lambda -0.6926 0.2166 Wald test of independence equations (rho=0): chi2(1)= 8.6600 Prob>chi2= 0.0033



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Table 3.4 Determinants of willingness to pay for forest conservation practices -

Heckman correction model estimation results


Log(WTP Adoption Forest Conservation Practices) Women 0.1322 0.1014 1.3 0.192 Age <25 0.4702 0.1871 2.51 0.012 Log(income) 0.1907 0.0692 2.76 0.006 Higher Education 0.1816 0.1144 1.59 0.113 Dominican nationality -0.2071 0.1985 -1.04 0.297 USA nationality -0.3556 0.1942 -1.83 0.067 European nationality 0.0398 0.2359 0.17 0.866 Canadian nationality -0.5452 0.2128 -2.56 0.01 Puerto Plata -0.1647 0.1643 -1 0.316 Punta Cana 0.01907 0.1352 0.14 0.888 Constant 1.2089 0.7061 1.71 0.087 Number of observations 609 Censored observations 229 Non-censored observations 380 Wald test chi2(10) 27.3100 Prob> chi2= 0.0023

Selection Equation: Disposition to pay for adoption of forest conservation practices Importance of: Soil Conservation Practices 0.0811 0.0342 2.37 0.018 Efficient Water Use 0.0146 0.0465 0.32 0.753 Habitat and Biodiversity Conservation -0.0391 0.0696 -0.56 0.575 Forest Conservation 0.0041 0.0772 0.05 0.958 Natural Landscape Conservation 0.1262 0.0698 1.81 0.071 Traditions and Rural Lifestyle Conservation 0.0342 0.0467 0.73 0.464 Organic Production 0.0149 0.0391 0.38 0.701 Constant -0.7861 0.2182 -3.6 0.000 /athrho -0.9994 0.1765 -5.66 0.000 /lnsigma 0.1573 0.0664 2.37 0.018 rho -0.7613 0.0742 sigma 1.1704 0.0777 lambda -0.8911 0.1399 Wald test of independence equations (rho=0): chi2(1)= 32.0400 Prob > chi2= 0.0000



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Table 3.5 Determinants of willingness to pay for natural landscape conservation



Log(WTP Adoption Natural Landscape Conservation Practices) Women 0.1612 0.1014 1.59 0.112 Age <25 0.5039 0.1861 2.71 0.007 Log(income) 0.2393 0.0727 3.29 0.001 Higher Education 0.1617 0.1086 1.49 0.137 Dominican nationality -0.0609 0.1853 -0.33 0.742 USA nationality -0.2995 0.1819 -1.65 0.100 European nationality 1.1791 0.2403 0.75 0.456 Canadian nationality -0.4823 0.2012 -2.4 0.017 Puerto Plata -0.1311 0.1651 -0.79 0.427 Punta Cana -0.0118 0.1344 -0.09 0.93 Constant 0.5994 0.7285 0.82 0.411 Number of observations 614 Censored observations 224 Non-censored observations

390

Wald test chi2(10) 29.6100 Prob> chi2= 0.0010 Selection Equation: Disposition to pay for adoption of natural landscape conservation practices Importance of: Soil Conservation Practices

0.0785 0.0335 2.34 0.019

Efficient Water Use 0.0297 0.0444 0.67 0.504 Habitat and Biodiversity Conservation

-0.0406 0.0667 -0.61 0.543

Forest Conservation 0.0131 0.0731 0.18 0.858 Natural Landscape Conservation

0.1047 0.0648 1.61 0.106

Traditions and Rural Lifestyle Conservation

0.0415 0.0462 0.9 0.37

Organic Production -0.0066 0.0381 -0.17 0.863 Constant -0.6917 0.2134 -3.24 0.001 /athrho -0.9944 0.175 -5.68 0.000 /lnsigma 0.1591 0.0669 2.38 0.017 Rho -0.7592 0.0741 Sigma 1.1724 0.0784 Lambda -0.8901 0.1406 Wald test of independence equations (rho=0):

chi2(1)= 32.2900 Prob > chi2= 0.0000



104

Table 3.6 Determinants of willingness to pay for natural landscape conservation practices. - Heckman correction model estimation results


Log(WTP Adoption Traditions and Rural Lifestyle Conservation Practices) Women 0.1111 0.1193 0.93 0.352 Age< 25 0.5454 0.2025 2.69 0.007 Log(income) 0.2083 0.077 2.71 0.007 Higher Education 0.0987 0.1351 0.73 0.465 Dominican nationality -0.1677 0.2288 -0.73 0.464 USA nationality -0.3419 0.2106 -1.62 0.104 European nationality 0.2092 0.2774 0.75 0.451 Canadian nationality -0.4275 0.2263 -1.89 0.059 Puerto Plata -0.2288 0.1893 -1.21 0.227 Punta Cana -0.0091 0.1602 -0.06 0.955 Constant 1.0435 0.7836 1.33 0.183 Number of observations 615 Censored observations 293 Non-censored observations 322 Wald test Chi2(10) 24.2000 Prob> chi2= 0.0071 Selection Equation: Disposition to pay for adoption traditions and rural lifestyle conservation practices Importance of: Soil Conservation Practices 0.0958 0.0368 2.6 0.009 Efficient Water Use 0.0975 0.0471 2.07 0.039 Habitat and Biodiversity Conservation -0.0265 0.0623 -0.43 0.67 Forest Conservation -0.1064 0.0861 -1.24 0.217 Natural Landscape Conservation 0.0234 0.0773 0.3 0.761 Traditions and Rural Lifestyle Conservation 0.1702 0.0522 3.26 0.001 Organic Production 0.0077 0.0401 0.19 0.846 Constant -1.0922 0.2607 -4.19 0.000 /athrho -0.7937 0.1827 -4.34 0.000 /lnsigma 0.1832 0.0726 2.52 0.012 rho -0.6605 0.1031 sigma 1.2011 0.0872 lambda -0.7933 0.1737 Wald test of independence equations (rho=0): Chi2(1)= 18.8600 Prob > chi2= 0.0000



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Table 3.7. Determinants of willingness to pay for adoption of organic production

system Heckman correction model estimation results


Log(WTP Adoption of Organic Production System) Women 0.1859 0.1227 1.52 0.13 Age< 25 0.5217 0.1876 2.78 0.005 Log(income) 0.1783 0.0735 2.43 0.015 Higher Education 0.0751 0.1273 0.59 0.556 Dominican nationality -0.1845 0.2107 -0.88 0.381 USA nationality -0.3951 0.2009 -1.97 0.049 European nationality 0.2165 0.2552 0.85 0.396 Canadian nationality -0.4319 0.2341 -1.84 0.065 Puerto Plata -0.1587 0.1893 -0.84 0.402 Punta Cana 0.0886 0.1529 0.58 0.562 Constant 1.2489 0.7681 1.63 0.104 Number of observations 621 Censored observations 328 Non-censored observations 293 Wald test chi2(10) 23.4500 Prob> chi2= 0.0092

Selection Equation: Disposition to pay for adoption of organic production system Importance of: Soil Conservation Practices

0.0974 0.0368 2.64 0.008

Efficient Water Use 0.0306 0.0481 0.64 0.524 Habitat and Biodiversity Conservation

-0.0509 0.0624 -0.82 0.415

Forest Conservation -0.0445 0.0811 -0.55 0.582 Natural Landscape Conservation

0.0345 0.0816 0.42 0.672

Traditions and Rural Lifestyle Conservation

0.1292 0.0512 2.52 0.012

Organic Production 0.0906 0.0389 2.33 0.020 Constant -1.319 0.3155 -4.18 0.000 /athrho -0.8171 0.2262 -3.16 0.000 /lnsigma 0.1241 0.0874 1.42 0.156 Rho -0.6734 0.1236 Sigma 1.1321 0.0991 Lambda -0.7624 0.2013 Wald test of independence equations (rho=0):

chi2(1)= 13.0400 Prob > chi2= 0.0003



106

People younger than 25 years make up the segment of the tourist market that are willing to pay an extra amount of money to encourage the adoption of farming practices that create positive environmental externalities. In relation to the impact of income, the coefficients on variable Log of income are positive and significantly different from zero in all equations. Similarly, the coefficients of the variable Higher Education positively affect WTP, but the hypothesis that these coefficients are equal to zero cannot be rejected at conventional significance levels, except in the case of the tourist's WTP for the adoption of habitat and biodiversity conservation practices. Tourists from the USA and Canada tend to be willing to pay less for positive externalities resulting from certain conservation practices. Although the coefficients of the variable European nationality are positive in most cases, they are not significantly different from zero. The opposite situation occurs with the variable Dominican nationality that presents negative but not significantly different from zero coefficients. The level of importance assigned to the existence of soil conservation practice is the major explanatory variable that impacts tourists’ WTP for the existence of other conservation practices. But in the case of organic production, the decision to support or not to support the adoption of this practice is correlated with the importance that tourists assign to the preservation of rural lifestyle and traditions, as well as the importance assigned to the promotion of organic agriculture. 9. Typology of agro-tourists One of the objectives of this study is to define a typology of agro-tourists. Conglomerate (or cluster) analysis was used to identify the existence of four groups of agro-tourists according to their preference levels, their behaviour in terms of WTP, and factors that would discourage them from participating in agro-tourism activities. The following categories were identified: Group 1 – ‘Authentic’ Agro-tourists: these tourists do enjoy agro-tourism, but they are not overly enthusiastic. They are the ones who assign the least importance to disincentive factors against agro-tourism, and show the greatest WTP to engage in agro-tourist activities. They also represent 17.8% of the tourists that showed interest in agro-tourism. 80% of this group is willing to pay for the existence of positive externalities associated with the adoption of conservationist farming practices. Group 2 – Discreet Agro-tourists: these tourists do not feel particularly attracted to agro-tourism, yet have a relatively high WTP for an agro-tourist activity. They place importance on factors such as distance, transport prices, and personal security. In this group, we find 29.9% of the tourists with an interest in agro-tourism. 66% of the tourists in Group 2 are willing to pay for the existence of positive externalities associated with the adoption of conservationist farming practices. Group 3 – Passionate Agro-tourists: these tourists have a high preference for agro-tourism, yet are less willing to pay for these activities. They assign an intermediate value to the factors that affect agro-tourism. Around 30% of the tourists interested in agro-tourism belong to this group. 79% of tourists in this group is willing to pay for the existence of positive externalities associated with the adoption of conservationist farming practices. Group 4 – Demanding Agro-tourists: these tourists have the highest preference levels for agro-tourism, exhibit a relatively low WTP, and assign the greatest importance to the disincentive factors. 21.9% of the tourists interested in agro-tourism fall within this group, with 71% willing to pay for the existence of positive externalities associated with the adoption of conservationist farming practices (see tables 4 and 5).


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Table 4 Number of agro-tourists with positive WTP for agro-tourism in the Dominican

Republic

Agro-tourist categories Total Organic Farming Systems

Conventional Farming Systems

Both Farming Systems

Authentic agro-tourists 432,886 234,076 158,147 40,663 Discreet agro-tourists 715,306 377,389 220,447 117,470 Passionate agro-tourists 752,761 396,497 225,240 131,024 Demanding agro-tourists 549,631 334,395 129,393 85,843 Total 2,450,584 1,342,357 733,227 375,000

Clusters elaboration using SPSS 10 Program. Source: Elaborated using data from Survey of Agro-tourism in the Dominican Republic 2003. ROA-FAO/INTEC Project. Table 5 Number of agro-tourists with positive WTP for existence of positive

externalities of agriculture in the Dominican Republic

Agro-tourist Categories Total Organic Farming Systems


Both Farming Systems

Authentic agro-tourists 347,210.7 187,748.8 126,847.0 32,614.8

Discreet agro-tourists 470,946.6 248,467.0 145,139.2 77,340.4 Passionate agro-tourists 596,700.4 314,296.3 178,543.6 103,860.6 Demanding agro-tourists 391,262.9 238,043.8 92,110.3 61,108.8 Total 1,806.121 988,556 542,640 274,925

Clusters elaboration using SPSS 10 Program. Source: Elaborated using data from Survey of Agro-tourism in the Dominican Republic 2003. ROA-FAO/INTEC Project. All tourists place importance on personal security, infrastructure, and surrounding attractions as disincentives for the practice of agro-tourism. Extrapolating from the sample data and the number of tourists that visited the DR in 2002, we estimate that about 2.4 million tourists could be interested in participating in one agro-tourism activity in the country and about 1.8 million is willing to pay for the existence of positive externalities associated with the adoption of conservationist farming practices (see figures 1 - 3).


108

Figure 1 Agro-tourist typology descriptive statistics by tourist categories

Mean value

0

100

200

300

400

500

600

WTP Rio Limpio

WTP San Juan

WTP Ambos

Preference for Agro-tourism

Distance

Transportation PriceSecurity

Infraestructure

Surroundings Attra

ctions

WTP Externalities

Variables

Mea

n V

alue

:

WTP

/ Pre

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nce

Leve

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porta

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Leve

l

Autentic agro-tourists Discreet agro-tourists Passionate agro-touristsDemanding agro-tourists Whole sample


Median value

0

100

200

300

400

500

600

700

WTP Rio Limpio

WTP San Juan

WTP Ambos


Distance


Infraestructure

Surroundings Attra

ctions

WTP Externalities

Variables

Med

ian

Val

ue:

W

TP/ P

refe

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vel /

Impo

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e Le

vel



109


Mode value

0

100

200

300

400

500

600

700

WTP Rio Limpio

WTP San Juan

WTP Ambos


Distance


Infraestructure

Surroundings Attra

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WTP Externalities

Variables

Mod

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:

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/ Pre

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10. Potential Economic Contribution of Agro-tourism Based on the agro-tourist typology presented in the last section, the potential economic contribution of agro-tourism is assessed given different scenarios. The assumptions are: i) the existence of a price discrimination mechanism in which each agro-tourists category pays either the median, mean or mode WTP corresponding to each group, ii) the existence of non-price discrimination mechanism in which all agro-tourists pay the value corresponding to either the whole sample median, mean or mode WTP (see table 6). In the most conservative scenario, price discrimination is not allowed and tourists would spend the whole sample mean value of WTP for agro-tourism and for the existence of positive externalities associated to the adoption of conservationist farming practices. In the most optimistic scenario, price discrimination exists and each agro-tourist category would spend the group modal WTP for agro-tourism and the existence of positive externalities associated to sustainable agricultural practices (see table 7). The conservative estimation presents the case where WTP for agro-tourism and the existence of positive externalities associated to sustainable practices could generate an income of US $251 million, which represents 8.4% of the tourism income and 9.8% of the farming GDP in 2002. Income generation within the most optimistic scenario would reach US $364 million, representing 12% of the tourism income and 14% of the farming GDP.


110

Table 6 WTP for agro-tourism and existence of positive externalities of agriculture in

the Dominican Republic

Agro-tourist WTP US$ Agro-tourism Positive Organic

Farming Systems


Both Systems

Externalities of Agriculture

Median WTP Authentic agro-tourists 150 150 300 15 Discreet agro-tourists 100 100 200 10 Passionate agro-tourists 70 75 120 13 Demanding agro-tourists 60 60 100 10 Whole Sample 80 95 150 10

Mean WTP Authentic agro-tourists 167 164 304 22 Discreet agro-tourists 135 130 230 27 Passionate agro-tourists 77 79 129 22 Demanding agro-tourists 70 64 111 14 Whole Sample 109 106 186 22

Mode WTP Authentics 100 200 200 5 Discreet agro-tourists 200 200 400 5 Passionate agro-tourists 100 100 150 10 Demanding agro-tourists 50 100 100 10 Whole Sample 100 100 200 10

Clusters elaboration using SPSS 10 Program. Source: Elaborated using data from Survey of Agro-tourism in the Dominican Republic 2003. ROA- FAO/INTEC Project.

11. Conclusions This study analyzes the links between agriculture and tourism. A contingent valuation study is presented assessing tourist’s willingness to pay (WTP) for agro-tourism and agriculture’s positive environmental services and related positive externalities. The paper analyzes factors influencing tourist preferences in the Dominican Republic (DR) -- tourist income, the local tourist destination, sex, and nationality stand out among these factors. Among the important findings are that tourists interested in participating in agro-tourism in the DR are basically motivated by the cultural experience. People interested in agro-tourism are also highly motivated to explore local cultures, and to practice eco-tourism and sports tourism. A tourist's WTP for agro-tourism in the DR increases as income levels increase; is higher among both women and tourists younger than 40 years old, and is lower for tourists travelling with children. Sustainable agricultural production practices tend to provide the types of amenities preferred by agro-tourists, essentially those relative to lifestyle and rural culture. No single amenity has a particular influence on the determination of WTP. The WTP for amenities linked to a rural setting correspond to the integrated value of all the amenities that define preferences for a rural setting.


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Table 7 Estimated potential income from agro-tourism and support of positive environmental externalities of agriculture

Pricing Scheme

Price Discrimination among Agro-tourists

Non Price Discrimination among Agro-tourists

US$ Millions Conservative Scenario 272 251 Optimistic Scenario 364 333 % Tourism Income Conservative Scenario 9.1 8.4 Optimistic Scenario 12.1 11.1

% Farming GDP Conservative Scenario 10.6 9.8 Optimistic Scenario 14.1 12.9

Assumptions: Aggregate tourism income: US$3,000 millions in 2002. Dominican Republic GDP: US$22,596 millions in 2002. Farming GDP/DR GDP: 11.4% in 2002. Conservative Scenario with price discrimination: Median WTP for each agro-tourist category. Optimistic Scenario with price discrimination: Mode WTP for each agro-tourist category. Conservative Scenario with non price discrimination: Whole Sample Median WTP . Optimistic Scenario with non price discrimination: Whole Sample Mean WTP. ource: Elaborated using data from Survey of Agro-tourism in the Dominican Republic 2003. ROA-FAO/INTEC Project. Agro-tourism offers the potential to involve 78% of the tourists that visit the DR, who are attracted to positive externalities associated with the adoption of conservationist farming practices. Some 60% of agro-tourists stated their interest in organic farming systems rather than conventional farming systems. A relevant finding is that tourist’s WTP for the existence of positive externalities associated with conservationist farming practices does not reflect any discrimination among farming systems in which positive externalities associated to the adoption of conservationist farming practices takes place. The economic contribution of agro-tourism and the existence of positive externalities associated with conservationist farming practices could exceed US $251 million annually, which would represent 8.4% of the tourism income in 2002 and 10% of the farming GDP. A more optimistic scenario indicates that the income generated could be as much as US $364 million, which represents 12% of the tourism income in 2002 and 14.1% of the farming GDP. Agro-tourism represents an important option to satisfy both immediate and future priorities associated with the goals of sustainable development by linking agriculture and tourism in the DR. An initial strategy to develop agro-tourism in the short-term in the DR should consider the need for better infrastructure and personal security for agro-tourists in the rural areas and effective collaboration with tour to promote this new tourist market for the DR.


112

Data Appendix

Note 1: The model estimated is the following:

εαδβ +++= *** WZXy where y* is tourist level of satisfaction due to the enjoyment of agro-tourism, Z* is a vector of tourist levels of satisfaction due to enjoyment of other tourist activities that may compete with agro-tourism, and W* is a vector of tourist levels of satisfaction due to enjoyment of some specific amenities associated with agro-tourism. The vector X represents tourist’s socio-demographics and economic characteristics. The variable y* is unknown. But we observe from the survey data that tourist ranks his/her level of preference for agro-tourism from 0 to 6, so

*5

,5*

4

,4*

3

3*

2

,2*

1

,1*

*

if 6

if 5

if 4

if 3

if 2

0 if 1 ,0 if 0

y

y

yy

y

yyy

≤=

≤<=

≤<=

≤<=

≤<=

≤<=

≤=

µ

µµ

µµ

µµ

µµ

µ

The variables in vectors Z* and W* are also unknown, but we can take as proxies the ranking of the level of preferences indicated by the tourist in the Survey with respect to each competing tourist activities as well each agro-tourism amenities. We estimate the following probabilities: P(y=0); P(y=1); P(y=2), P(y=3), P(y=4), P(y=5) and P(y=6), conditioned on tourist demographic characteristics and tourist’s preferences for alternative agro-tourism competing activities and tourist’s preferences for agro-tourism amenities. Note 2: The model estimated is the following. Suppose that y* and z* are two latent variables, where y* measures tourist level of satisfaction due to his/her contribution to the adoption of a certain conservation practice, and z* measures tourist level of commitment with the adoption of the conservation practice considered. Both latent variables are generated by the following bivariate process

+

=

1,~ ,

2

*

*

ρσρσσ0

γWβX

NIDvu

vu

zy

i

i

i

i

i

i

i

i

where Xi is a vector of observations on tourist’s socioeconomic characteristics and Wi is a vector of tourist’s perceptions of how important is the adoption of a set of conservation practices on a scale from 0 to 6, where 0 means not important and 6 means extremely important. β and γ are unknown parameter vectors, σ is the standard deviation of ui and ρ is the correlation between ui and vi. It is imposed a restriction that the variance of vi is equal to one because just the sign of z* is observed. In fact only the variable y and z are observed, which are related to y* and z* in the following way:

otherwise. 0 ;0 if 1

otherwise; 0 ;0 if *

**

=>=

=>=

iii

iiii

zzz

yzyy


113

This is a model with sample selectivity where observations are classified in two types: ones for which yi and zi are observed to be zero and ones for which zi=1 and *

ii yy = . In this model tourist’s level of commitment with the adoption of a certain practice is a function not only of his/her perception of the importance of this particular practice, but also the perception of the importance of other conservation practices, acknowledging the possibility that two or more practice can interact, developing a relationship of complementing or substituting each other.


114

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